A RAPID fall in house prices is likely and could be the biggest threat to the UK economy this year, a survey showed yesterday .

More than three-quarters of 21 senior economists polled said a sharp downturn in the market would pose the greatest risk to economic stability.

But housing experts in Merseyside yesterday said they felt the region is likely to buck the trend and escape a national downturn in prices.

While falls of 20% or more could trigger sharply lower consumer spending and a downward spiral in confidence nationally, Merseyside could swerve the trend because of its Capital of Culture status, some housing experts said yesterday. Estate agent Phil Lawton, from Sutton Kersh estate agents, said: "While I would agree that a house price fall would be damaging to the national economy it won't happen on Merseyside.

"We've been building up the city and we're also benefiting from the effects of the Capital of Culture win.

"The house prices won't fall locally because we'll buck the trend. We've got so much to do and investors look at Liverpool and Merseyside positively."

Yet property analyst Steve Beilin, manager of BE estate agents, said Merseyside will not rise as rapidly as in the past as it is not as attractive as it was five years ago. He said: "Liverpool had the benefit of catching up with the rest of the country which means that Liverpool's house prices are now on par with other English cities like Newcastle and Birmingham. They were cheap but they are now 'normal' prices."

"Merseyside had houses at rock bottom prices, but now they've been bought and are selling for £80,000 plus.

"So Liverpool is now not the bargain it once was."

He added: "Liverpool prices are not that attractive now and the Capital of Culture status will only allow us to do four or five per cent better than the rest of the country."

Andrew Oswald, of Warwick University, said a large dip in nominal house prices leading to lower confidence was likely.

Another economist, former Bank of England Monetary Policy Committee member Sushil Wadhwani, said the housing market correction "could be deeper and longer lasting" than the current Bank of England forecast.

Most economists in the Financial Times survey thought the UK was well placed to withstand any large currency alignments that threaten to rock the world economy during the coming year.

But there were sharp divisions about whether the British economy was set to record more balanced growth, with exports and investment taking up the baton from household consumption and Government spending.